Homes 'likely to fund retirement' for many

Last updated at 10:35 03 December 2007

Britain's pensioners will be sitting on housing equity worth £2.21 trillion by 2036, it was predicted today.

The increase in the value of mortgage-free property owned by the over-60s looks set to soar by 61 per cent from its current level of £1.37 trillion, according to retirement planning group Sovereign Reversions.

The group said 80 per cent of people over 60 currently owned their own home, with the average property worth £265,000 once outstanding mortgage debt had been taken into account.

It said people were likely to become increasingly reliant on unlocking money from their home to fund their retirement in future as fewer people had generous final salary pensions and increased life expectancy led to further reductions in annuity rates.

It added that by 2036 there will be around 20.8 million people aged over 60, the equivalent of nearly a third of the population, while almost a quarter of the population will be aged over 65.

"The UK's savings and assets are increasingly concentrating in the hands of the older generation. Older people typically own more valuable homes than the average and the vast majority have no mortgage debt left.

"For many, the value of their home will become an obvious source of income to help fund their retirement as traditional means of income and support are eroded."